• Gains on USD capped by the retreat in Treasury yields
• CAD grows as Canadian economic environment looks promising
• EURUSD rises despite German retail sales missing forecasts
US Dollar remained broadly weaker on Wednesday as Treasury yields began to retreat, cooling down the bond market and reigniting demand on riskier assets. Since last week, bonds have been at the center of the storm in the financial markets. Equities were knocked off from record highs and commodities prices also wobbled. There is, however, worry among investors that improvement in the US economy would reignite the rally on bond selling. Given the worry, Fed Governor Lael Brainard commented that, she would “pay close attention” to the bond market.
CAD edged higher against its major counterparts including USD on Tuesday, as domestic data showed faster-than-expected economic growth. In the Q4, Canada’s economy grew at an annualized rate of 9.6%, beating expectations at 7.5%. However, Canada’s major export – oil – will have its fate determined on the OPEC+ meeting this week. Member countries are expected to ease previous curbs on the supply, given the promising recovery on the global economy from COVID. Currently, WTI crude trades around $59.89 at press time.
EURUSD is currently fluctuating around $1.2, with a slight increase despite worse-than-expected German retail sales In January. The data revealed that, German retail sales fell by -4.5% MoM. As of now, the country also faces the potential extension on its lockdown until late March. Germany’s recovery will, to a large degree, determine the recovery of the Eurozone, and many investors are concerned on its current speed. On the other hand, USD investors are looking ahead to the ISM Services PMI, hoping for a boost in the USDEUR exchange rate. Tomorrow we will also see the release of US ADP employment data, as a heads up to Friday’s non-farm payrolls.